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Augean seeks £11m landfill tax repayment

Augean, one of the UK's leading specialist waste management businesses, is seeking to claw back £11.1m of landfill tax it has paid, following successful legal challenges to HMRC rulings brought by other operators

18 May 2020

Pat Sweet

The company’s claim for repayment includes interest overpaid in relation to engineering materials used as part of its landfills cell construction, which are colloquially referred to as the 'fluff layer'.

Augean said it is seeking to protect its position in the light of legal challenges brought by other waste site operators that have successfully argued before the Upper Tax Tribunal that they can reclaim landfill tax accounted for on the 'fluff layer'.

HMRC has challenged the Upper Tribunal decision and it is expected the matter will be heard in the Court of Appeal at a yet to be determined date. The outcome of that appeal will have a direct bearing on the claim filed by Augean.

Augean said its claim is in part a reclaim of landfill fax overpaid and in part a set off against the £40.4m landfill tax assessment it paid in December 2019, and which the company challenged at a First Tier Tribunal (FTT).

The period of the 'fluff layer' claim dates back to August 2013. The claim will be accounted for as a contingent asset.

Jim Meredith, executive chairman of Augean, said: ‘The group has watched with interest the waste industry's progress in its legal claims against HMRC.

‘It seemed appropriate for the group to follow the rest of the industry in making claims, particularly having paid the assessments in full in December 2019, and the group hopes to see a repayment of tax following the Court of Appeal decision.’

At the end of last year, Augean announced it had renewed and extended its banking facilities and paid all outstanding disputed HMRC landfill tax assessments and interest accrued to date.

The total amount involved was £40.4m, which included interest of £2.7m plus penalties.

At the time the company said its decision to make the payment was driven by the consideration that it had ‘endured considerable uncertainty due in a large part to HMRC's actions, which has imposed significant constraints on the board's management of the business and its further development’.

By making payment, it was able to stop any further accrual of interest (should HMRC's case succeed). Augean was also able to claim a corporation tax deduction for the relevant expense which was treated as an exceptional item in the results for the year ending 31 December 2019.

At the time Meredith said the company maintained its position that it had correctly collected and paid the appropriate landfill tax, and indicated it plans ‘continue to robustly challenge the assessments received through the tax tribunal system’.